The Best way to invest 40K

pegginout

Can any of you lovely MSE'ers help?

My friends husband sadly passed away recently but has left her 40k.
She's a tax payer and has a mini cash ISA which shes already whacked 3k in. She will top this up in april.

But any suggestions where she can invest the rest?
Is a fixed rate bond a good idea as the interest rate may drop?
She does't want to put into the stockmarket, too risky.
can she put it in her childs name as he's only 11 so she won't pay tax?

I really want to help her make this money work for her. Her husband used to do all the finances so she's a bit clueless with money.
any advice will be welcome!

Mikeyorks

pegginout wrote: »

Is a fixed rate bond a good idea as the interest rate may drop?

Er ... no. The whole point of 'fixed' rate ... is so you know what you get from the start. The interest / capital is constant for the whole period of the fix.

Nor can you save tax by placing this in the child's name - HMRC are wise to that and tax will be payable at the parent rate on any interest over £100.

My reply from where you also posted this on the ISA forum. Where I think you qualified rather more heavily this must be entirely risk free? :-

Preserve £3.6k to put into her ISA immediately after 5.4.08. Put £10k or £15k into NS&I index linked Certificates (tax free) and £23.4k or £18.4k into Northern Rock 1 year fixed rate Bond at 6.9%.

(she will probably need to move quickly on the NR offer - despite it was only announced today)

pegginout

Are people still using Northern Rock after the recent incident?

Dixie99

A fixed rate bond is probably your best bet. Shop around, you should be able to get a bond for 6 months at more than 6% at the moment. Fit it for longer if you are sure you don't need access to it.

tawse57

pegginout wrote: »

Are people still using Northern Rock after the recent incident?

Northern Rock today brought out a brilliant looking 12 month bond with IR of 6.9% annual or 6.7% monthly (both gross) which you can withdrawl from at any time you like. It will not be around for long as this will be snapped up in a few days by people. The NR is backed by the Government at the moment so is perhaps the safest place to put your money at the moment.

Certainly, put 3K into a mini cash ISA now and another 3K come April 7th. There is some good advice in the savings section of this website to good fixed rate 12 month ISAs.

There is a thread in this forum on the new NR bond.

This is not professional advice, just my personal views.

Heynow123

get a good financial planner

Aegis

Rammah wrote: »

Why invest in a bank??? Put it into a property and make a lot more! So many options available! pm me your number and I'll call you for a thorough discussion.

If the stock market is too risky for her, why on earth would you recommend property investing, which is much the same in terms of volatility, especially if you don't diversify enough? Please stick to the OP's desired attitude to risk if you want to give even very generic financial advice.

To the OP: one this to consider looking out for is an issue of NS&I Index-linked Savings Certificates. They are guaranteed to grow more than inflation (measured by RPI rather than CPI) and are 100% tax free. I would presume that your friend could buy £15000 in her own name and another (insert desired amount up to £15000) in her child's name.

This then ties up the money for her for a few years at a very good rate of interest that she could only beat if she were a non-taxpayer. Of course, if my assumption is incorrect and she's NOT a taxpayer, an instant access savings account will currently do better than these, so consider that before making any decisions.

Jonbvn

As Aegis states, Index Linked Saving Certs seem like the way to go, assuming your friend is a tax-payer. The reasons being:

1. Tax-free.
2. Will beat inflation (RPI).
3. Guaranteed by the Treasury.

The only downside I can see is that she would have to tie up the money for a minimum of 1 year to enure she got interest.

derrekmay

I would diversify that money.
It's a big amount of money.
This is how you could do it.
Put a part in a savingsaccount.
Put something in a low risk fund.
But also put a part in a higher risk investment.
But always make sure that the money you invest in a high risk investment is money that you can affor to lose.
However if the returns are verry good you'll see that your money is working for you.

Aegis

derrekmay wrote: »

I would diversify that money.
It's a big amount of money.
This is how you could do it.
Put a part in a savingsaccount.
Put something in a low risk fund.
But also put a part in a higher risk investment.
But always make sure that the money you invest in a high risk investment is money that you can affor to lose.
However if the returns are verry good you'll see that your money is working for you.

derrickmay, the OP specifically stated that the plan was to avoid the stockmarket altogether because it was too risky. This would imply that the lady in question is risk averse, so suggesting a high risk fund is unlikely to go down well

Mikeyorks

pegginout wrote: »

Are people still using Northern Rock after the recent incident?

Wouldn't have suggested it otherwise. You should be aware from these threads / media that savings in Northern Rock are safer than anywhere else, at the moment, as they're fully backed by Treasury.
The new 1 year Bond follows that - no one else will currently match the interest rate (as they're virtually all reducing) - and, most unusually, it allows penalty free withdrawals.

Just don't buy Northern Rock shares - which is an entirely different proposition.

And don't trust some of the replies you've got. The one from Rammah (the scammer) - you don't go anywhere near. And others .. recommending higher risk investments .... haven't read your post, and should be more careful.